Optimism-based lending protocol Kokomo Finance has been suspected of a $4 million \u201cexit scam\u201d that has seen user funds plucked from the platform via a smart contract loophole.<\/p>\n
Blockchain security firm CertiK<\/a> alerted its followers to the \u201cexit scam\u201d in a March 26 tweet, noting that the Kokomo Finance (KOKO) token had plummeted 95% in value in a matter of minutes. <\/p>\n CertiK also noted that Kokomo Finance removed all social media accounts immediately following the alleged rug pull too. <\/p>\n CertiK said the deployer of KOKO attacked the smart contract code<\/a> of a wrapped Bitcoin token, cBTC, by resetting the reward speed and pausing the borrow function.<\/p>\n After that, an address beginning with \u201c0x5a2d..\u201d approved the new cBTC smart contract to spend over 7000 Sonne Wrapped Bitcoin (So-WBTC).<\/p>\n #CertiKSkynetAlert<\/a> <\/p>\n On 26 March 2023, Kokomo Finance conducted an exit scam and stole ~$4 million in user funds.<\/p>\n Details Below https:\/\/t.co\/BEPwfahblz<\/a><\/p>\n \u2014 CertiK Alert (@CertiKAlert) March 26, 2023<\/a><\/p><\/blockquote>\n The attacker then called another command to swap the So-WBTC to the 0x5a2d address, which produced a $4 million profit, according to the security firm.<\/p>\n A CertiK spokesperson told Cointelegraph that it was the largest \u201cincident\u201d that the firm had detected on Optimism.<\/p>\n Kokomo Finance is an open-source and noncustodial lending protocol on Optimism, where investors could trade for wBTC, Ether (ETH<\/a>),\u00a0Tether (USDT<\/a>),\u00a0USD Coin (USDC<\/a>)\u00a0and Dai (DAI<\/a>).<\/p>\n Kokomo Finance rose up the ranks quickly in recent days, with blockchain data platforms like CoinGecko<\/a> and DefiLlama<\/a> officially tracking it shortly after Kokomo Finance went live<\/a> on Optimism on March 25.<\/p>\n Recent screenshots reveal that more than $2 million was locked into Kokomo Finance prior to it falling more than 97%.<\/p>\n @KokomoFinance<\/a> is an open source and non-custodial lending protocol built on Optimism and @arbitrum<\/a> . \u2014 Az.eth (@0x_az) March 26, 2023<\/a><\/p><\/blockquote>\n Over 72% of the total value locked in the Kokomo Finance protocol came in the form of wrapped Bitcoin, according<\/a> to data from DefiLlama.<\/p>\n Cointelegraph attempted to access all social media and blog websites listed on Kokomo Finance\u2019s Linktree<\/a> page, but all of these links now lead to error pages indicating they have been removed.<\/p>\n Related: <\/em><\/strong>7 DeFi protocol hacks in Feb see $21 million in funds stolen: DefiLlama <\/em><\/strong><\/a><\/p>\n Cointelegraph also came across Kokomo Finance\u2019s smart contract audit, which was reviewed<\/a> and shared by 0xGuard earlier in March. <\/p>\n While most aspects of the audit were passed, \u201ctypographical errors\u201d were found, and the owner of the KOKO token was alsfound to have a one-time ability to mint 45% of the maximum supply to an arbitrary address. <\/p>\n Cointelegraph reached out to 0xGuard for comment but did not receive an immediate response.<\/p>\n Magazine: <\/em><\/strong>Should crypto projects ever negotiate with hackers? Probably<\/em><\/strong><\/a><\/p>\n<\/div>\n![\"\"](\"https:\/\/s3.cointelegraph.com\/uploads\/2023-03\/bd7638e0-fe4f-4499-ab1f-478051ae03d5.jpg\" "\\"\\"")
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– Launch on @DefiLlama<\/a>
– Audited by @0xGuard<\/a> $KOKO<\/a> TVL : 2M, is continuously increasing, money will flow into this lending platform soon when it is deployed on @Arbitrum<\/a>. pic.twitter.com\/RduuHBWX39<\/a><\/p>\n![\"\"](\"https:\/\/s3.cointelegraph.com\/uploads\/2023-03\/72bfd875-79cf-454c-af82-d48d8d41a5ae.jpg\" "\\"\\"")